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Eyes on Trade is a blog by the staff of Public Citizen's Global Trade Watch (GTW) division. GTW aims to promote democracy by challenging corporate globalization, arguing that the current globalization model is neither a random inevitability nor "free trade." Eyes on Trade is a space for interested parties to share information about globalization and trade issues, and in particular for us to share our watchdogging insights with you! GTW director Lori Wallach's initial post explains it all.

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October 31, 2008

Feeling the heat to hide one's shadow

(Disclosure: Global Trade Watch has no preference among the candidates.)

Buckle in, because you are going to see a torrent of fair-trade election madness on this blog in the coming days like you've never witnessed before. Some of you will recall that we wrote the most comprehensive analyses I've seen yet of the 2006 elections, and we're about to repeat it again for the 2008 elections. We are monitoring over 120 races - over 250 candidates - for federal office, and looking at the role that trade and other pocketbook issues are playing. We'll release this nearly 100-page report (with a shorter findings section) shortly after the polls close on Wednesday.

One of our key findings is that candidates of all stripes are feeling the pressure from their constituents to run on fair-trade platforms. The Milwaukee Journal-Sentinel is reporting on one:

In his fifth term, U.S. Rep. Paul Ryan should be very familiar to the people of southeastern Wisconsin. The Janesville Republican is an economic conservative who hasn't seen a free-trade deal he didn't like. So forgive the people of the state's 1st Congressional District if they are a little confused by Ryan's latest ad.

"People are hurting because American companies benefit by shipping jobs overseas," the 38-year-old pol says into the camera. Ryan then complains that it is "unfair" for American companies to get a tax break by producing goods elsewhere and then importing them to the U.S. "Instead of exporting jobs," he concludes, "we should be exporting American products."

That's a lot of fair-trade rhetoric from someone known as a free-trade champion...

[Sacchin] Chheda, the spokesman for the Wisconsin Fair Trade Coalition, said it sounded as if Ryan was trying to come up with "a solution to a problem he's created" by voting repeatedly for free-trade measures.

By the coalition's count, Ryan has voted 17 times for various international trade deals, including ones to lower or eliminate taxes and tariffs on trade between the U.S. and Central America, Australia and Peru. He also supported a measure to normalize trade relations with China.

"(The ad) suggests that he believes in order to honestly represent his constituents, he'd need to have the exact opposite record on these issues," Chheda said.

A slumping economy, years of stagnating wages for many workers and
unease about the rise of China as an economic power are fueling popular
skepticism toward free trade and buoying Democratic candidates who are
seizing on anxieties about globalization...

One Republican free trader feeling the heat is Oregon Sen. Gordon
Smith, who likes to remind voters that one in five jobs in the state
depends on overseas trade. He has supported the North American Free
Trade Agreement and voted for the Central American Free Trade
Agreement. "Oregon is probably the most trade-dependent state in
America," Sen. Smith said. "Portland is called Portland because it's a
port."

Now Sen. Smith is scrambling to hang on to his seat, as his Democratic opponent, Jeff Merkley, hammers on the trade issue.

From Oregon to Georgia to upstate New York, skepticism about the
benefits of free trade is rippling through campaigns for several House
and Senate seats, many of them races where Democrats are running strong...

Most Democrats don't call for blatant protectionist measures such as
steep tariffs, or a return to import quotas such as those that governed
automotive trade in the 1980s. Instead, Democrats, starting with
Presidential candidate Sen. Barack Obama, talk about the need for trade
to be fair, and insist that trading partners be required to meet higher
standards for environmental controls and workers' rights to unionize.

Millionaire Mark Penn Misunderstands the Youth on Trade

While Bush got 45 percent of young voters in 2004, Obama is likely
to open up a 20-point gap with this bloc; they grew up knowing only
Bill Clinton or George W. Bush as president.

In the latest Zogby poll, Obama won the crucial moderate vote by
2-to-1, 60 percent to 30 percent. Obama wins nearly nine in 10 liberals
as well, putting together a strong center-left coalition and leaving
John McCain with a big margin only in the sizable conservative bloc.

In contrast, this election is scrambling the votes of working-class and wealthier voters...

These new moderate voters are better-educated, more in tune with the
information age and far removed from the traditional labor base of the
Democratic Party. They are more open to trade and sensitive to tax
increases. They also oppose the Iraq war, but they want to see strength
in national security. They overwhelmingly will favor new energy
policies for ethanol and other biofuels, solar power and wind power.

Moving beyond Zogby to the more reputable Democrarcy Corps Greenberg poll, Battleground voters of all ages are overhwhelmingly against NAFTA, with Generation Y even more so than Generation X.

There is an important generational “hump” in feelings about NAFTA
in battleground states, with Gen X’ers feeling warmer than both Gen Y
and Baby Boomers. All generational cohorts are nevertheless cool to
NAFTA.

The hump effect disappears nationally, but all age cohorts are still overwhelmingly anti-NAFTA. By the way, the battleground states in the survey are not just Rust Belt states, but also southwest and Rocky Mountain west.

On Wednesday, the International Monetary Fund
announced it would lend up to $100 billion to healthy countries that
are having trouble borrowing as a result of the turmoil in the global
markets. And the Federal Reserve
said it would commit up to $30 billion each to Brazil, Mexico, South
Korea and Singapore, to enable those countries to more easily swap
their currencies for dollars...

The loans will carry none of the strings that usually accompany fund
money, including demands to raise interest rates and cut public
spending...

That prospect troubles some critics, who contend that the fund is
prescribing the same radical measures that caused unnecessary pain in
some Asian countries during that region’s financial crisis a decade ago...

Suspicion of the fund is a global phenomenon: the Korean government
declared it would not take any loans. Feelings there are still raw from
the Asian financial crisis, during which the fund forced South Korea and other countries to raise their interest rates sharply.Mr.
Strauss-Kahn, a former French finance minister, said he was aware of
resistance stemming from the Asian crisis and was trying to tailor
loans more closely to the conditions in the countries.

October 26, 2008

United States and China teaming up to push toxic toys?

As state (and some federal) legislators across the United States have been working feverishly to keep toxic toys away from children, the U.S. government is working to derail other countries' efforts to do the same.

Which country do you think the U.S. government is partnering with to attack toy-safety standards? It couldn't possibly be China (the source of a flood of unsafe imports in recent years to the U.S.), could it?

According to Inside U.S. Trade:

The U.S. and China this week both pressed Brazil at the World Trade Organization on import licensing procedures for toys put in place last year in order to help ensure the safety of imported toys, and claimed that the procedures have caused unnecessary delays for exporters trying to ship toys to the Brazilian market.

The two countries raised the issue in an Oct. 19 meeting of the WTO Committee on Import Licensing. While the manufacturing and shipment of toys largely occurs in developing countries such as China, Malaysia and Thailand, toy companies such as Mattel that are headquartered in the U.S. and design products here are also interested in the issue, sources said.

For the third level of irony/disgust in this situation, please see our recent post about Delegate Jim Hubbard from Maryland who received troubling correspondence from the Chinese government regarding legislation he introduced to remove toxic toys from Maryland shelves.

It's really nice that in the face of a product-safety crisis here at home, the U.S. is using scarce government resources to attack other countries' regulations, at the behest of Mattel and with China no less.

October 25, 2008

Trade Takes Center Stage in Campaign Ads

As the clock
ticks rapidly toward the November 4, 2008 elections, the evidence is
increasingly irrefutable that the only path to the White House and Congress is through,
and definitely NOT around, the bread-and-butter impact of the global
financial crisis on American families. A recent
poll release by Bloomberg/Los Angeles Times added volume to a
growing chorus of voter surveys indicating that there really isn't much point
in candidates skirting the issue of the "serious economic crisis" now
cited by more than 75 percent of Americans.

It's hardly
surprising then that the leading issue across the nation is also the leading
issue in the hard-fought Midwestern swing states, where the structural shifts
in the U.S. economy away from "real economy" domestic industrial production in
favor of Wall Street-led financial services in recent decades has been most in
evidence. A recent Ohio
Newspapers poll (PDF), found that 55 percent
of likely voters thought free trade
agreements - such as NAFTA - have been bad for Ohio's economy, with only 17 percent saying
that such agreements had been good for the economy.

With this in
mind, more than 70 (and climbing) television ads in federal races feature trade this election
season (more than double the 2006 ad count), making it one of the hottest items on the
2008 political stage. For just one sample, see Ohio's
15th Congressional District where both sides of the congressional race
for retiring Rep. Ralph Regula's (R-Ohio) seat feature ads on trade. Democrat
John Boccieri's ad promises to "fight against trade policies that
ship our jobs overseas," while Republican
Kurt Schuring promises "fairer trade policies that would create
jobs."

Public
Citizen's Global Trade Watch division will be continuing to monitor the role
that trade and globalization issues play in the 2008 elections, including a full
analysis of the role trade and globalization positions play in shaping the
actual outcome of both the presidential and over 100 congressional races. Our
Trade in the 2008 Elections report will be released the morning of
November 5th, just hours after the polls close.

Disclosure:
Global Trade Watch has no preference among the candidates.

Former President Clinton told a U.N. gathering Thursday that the global food crisis shows "we all blew it, including me," by treating food crops "like color TVs" instead of as a vital commodity for the world's poor.

Clinton criticized decades of policymaking by the World Bank, the International Monetary Fund and others, encouraged by the U.S., that pressured Africans in particular into dropping government subsidies for fertilizer, improved seed and other farm inputs as a requirement to get aid. Africa's food self-sufficiency declined and food imports rose.

Now skyrocketing prices in the international grain trade — on average more than doubling between 2006 and early 2008 — have pushed many in poor countries deeper into poverty.

Indeed, many countries have become net food importers over the neoliberal period, and are already being slammed by an increase in food prices brought on by the ethanol boom and weather disruptions. According to World Bank data, in 2005, after a decade of the WTO, 103 countries were net food importers, a figure that was at least 19 more than in 1991, prior to the conclusion of the Uruguay Round. These World Bank estimates include unstable nations like China, the Philippines, Pakistan and Nigeria - all of whom were previously food self-sufficient. At least 14 additional countries - like Haiti and Mozambique - were self sufficient in 1981, before structural-adjustment policies were adopted. Additionally, some poor countries like Sierra Leone and Haiti are spending well over half of their export revenues just to finance food imports.

Pathological Repression & Denial in Colombia

Every time the credibility of Colombian authorities reaches a new and seemingly unsurpassed low, they somehow manage to maintain it in free-fall. It's par for Uribe's course to accuse any and all opposition of being terrorist (taking a queue from buddy Bush), but his government accusing anti-FTA indigenous protesters (sorry CNN, 'Indians' hail from a different hemisphere) of shooting each other to enliven the action? Its downright sociopathic.

That President George W. Bush’s idea of a global plan “to avoid a repetition” of the
financial crisis spawned in large part by radical deregulation of financial services is to call a summit for nations “to strengthen the underpinnings of capitalism by discussing how they can enhance their commitment to open, competitive economies, as well as trade and investment liberalization” brings to mind Einstein’s definition of insanity: doing the same thing over and over and expecting a different result.

The White House today said that the Nov. 15 summit would advance a common understanding of the crisis’ causes and lead global leaders to agree “on a common set of principles for reform of regulatory and institutional regimes for the world's financial sectors.” Yet unless the radical financial services deregulation agenda that has been aggressively promoted and entrenched by the World Trade Organization (WTO), World Bank and International Monetary Fund is understood as a source of the current crisis, reform proposals will not address the crisis’ root causes.

The content of the Bush administration summit announcement suggests that trying to resuscitate the radical deregulatory agenda and the laissez faire ideology thoroughly discredited by this crisis is the primary objective of the summit, rather than a serious discussion of what new global governance and regulation is required.

While an extreme deregulation agenda had been pursued in the United States by various administrations, it was the WTO’s 1995 General Agreement on Trade in Services (GATS) and 1999 WTO Financial Services Agreement (FSA) that exported the radical deregulation agenda worldwide and locked it into place. Deregulation of the financial services sector - including banking, insurance, asset management, pension funds, securities, financial information and financial advisory services - has been among the most important but least discussed aspects of the WTO’s agenda since its inception.

As part of its original WTO commitments, the United States agreed to conform a broad array of financial services including banking, insurance and other financial services to comply with GATS rules. In some cases, for instance regarding the “firewall” policies established in the 1933 Glass-Steagall Act that forbade bank holding companies from operating other financial services, U.S. WTO commitments that contradicted domestic policy were used to push for domestic revocation of existing laws. (The U.S. WTO GATS schedule explicitly includes a Clinton administration commitment to roll back Glass-Steagall, which had been keeping foreign financial service firms that offered both traditional consumer banking and investment banking services from operating here.) Other U.S. WTO commitments in financial services simply locked into place existing U.S. policies because the GATS includes a “standstill” rule - meaning countries may not roll back liberalization and deregulation once a sector is bound to GATS.

The United States then used ongoing WTO financial service negotiations to export the U.S. model of extreme financial service deregulation to the other 100-plus WTO signatory countries, including through a 1999 WTO Financial Service Agreement. Further financial service deregulation is currently on the agenda of the WTO Doha Round talks.

Who Needs Health and Environmental Protections Anyway?

U.S. chemical giant, Dow Agrosciences, has filed the first round of NAFTA Chapter 11 paperwork to sue Canada over a recent province-wide ban on residential use of pesticides.

Embassy Magazine reports:Dow Agrosciences insists Quebec's province-wide ban on the residential use of weed-killing chemicals breaches legal protections owed by Canada to U.S. investors under the NAFTA. The U.S. company, which has an extensive manufacturing and sales operation in Canada, wants to be compensated by the Feds for losses incurred to its star product, 2,4-D, one of the most popular chemical ingredients used in commercial pesticides.

Canadian radio station, CJAD shares reactions:It's repugnant," says Kathleen Cooper of the Canadian Environmental Law Association, who argues the company is taking advantage of the NAFTA clause Chapter 11 to try to circumvent the courts and to try to stop pesticide bans from spreading."This is legislation that's been put in place by democratically elected governments.""If they are successful, they may be able to force Quebec to overturn the law."

This use of NAFTA's Chapter 11 to challenge domestic regulations would by no means be new. Canada is still defending itself against a $100 million Chapter 11 investor claim brought by U.S.-based Chemtura Corporation. We recently posted information about a coming U.S. investor challenge to Canada’s health care policies. Public Citizen issued a report examining 50 such NAFTA “investor-state” cases brought in Canada, the United States, and Mexico.

Embassy reporter Luke Eric Peterson shares his take on the motivations behind the recent increase of U.S. industry challenges to Canadian domestic regulations:

Such regulatory moves [Ontario following Quebec’s lead in banning certain pesticide use] will eventually draw wider attention and scrutiny in other jurisdictions—including the far more lucrative U.S. market. If the U.S. chemical industry hopes to avert a domino effect, it may need to borrow a page from the War on Terrorism tactics book: fighting tougher regulation abroad, so they don't have to fight it on the homefront.

October 21, 2008

Melamine Scare Goes Adult

According to Marie Claire magazine, Britain's novelty shop Ann Summers has had to pull some of its most popular edible sex toys off the shelf because they contain many times the allowable amount of melamine. The guilty culprit? A Chinese manufacturer named, wait for it, Le Bang. I think that is about as much juice as I can offer on a family-oriented blog like our own, so you'll have to go the original source if you want more details.

As we wrote last holiday season, one of the main reasons that corporations have offshored so much production to China in the WTO era is to avoid U.S.-style product liability laws. The NYT reports on how this lack of product safety is affecting consumers within China:

The first sign of trouble was powder in the baby’s urine. Then there
was blood. By the time the parents took their son to the hospital, he
had no urine at all.

Kidney stones were the problem, doctors told the parents. The baby died on May 1 in the hospital, just two weeks after the first symptoms appeared. His name was Yi Kaixuan. He was 6 months old.

The
parents filed a lawsuit on Monday in the arid northwest province of
Gansu, where the family lives, asking for compensation from Sanlu
Group, the maker of the powdered baby formula that Kaixuan had been
drinking. It seemed like a clear-cut liability case; since last month,
Sanlu has been at the center of China’s biggest contaminated food
crisis in years. But as in two other courts dealing with related
lawsuits, judges have so far declined to hear the case...

Chinese officials, under pressure to promote fast rates of economic
growth and to enforce social stability, routinely favor producers over
consumers. Product liability lawsuits remain difficult to file and
harder still to win, especially if the company involved is state-owned
or has close connections to the government...

“This is a product liability case that in a Western country would turn
into a class-action lawsuit,” Professor Zhang said. In China, he said,
“they don’t want to see so many people getting involved in one lawsuit.
This might threaten social stability.”

October 17, 2008

The Eye Roll Felt Around the World

In the final debate of the 2008 Presidential Election, “trade” got mentioned 20 times. The issue’s still not quite as popular as Joe the Plumber’s 26 shout outs, but at least it was discussed, albeit briefly.

The candidates first discussed NAFTA, then the issue of off-shoring and American worker displacement related to so-called "Free Trade Agreements" (FTAs). Obama stressed that “we've got to have a president who is going to be advocating on behalf of American businesses and American workers,” while McCain responded that he would support “education and training programs for displaced workers”.

And still, right after acknowledging that these FTAs are sending American jobs overseas, McCain proposed that the Colombian FTA would actually “help us create jobs in America because they will be a market for our goods and products”.

Obama missed the opportunity to further discuss the fundamental problems with FTAs by expressing ardent support for the Peru FTA, but he did bring up human-rights issues with the Colombian FTA. “The history in Colombia right now is that labor leaders have been targeted for assassination on a fairly consistent basis and there have not been prosecutions,” Obama said, “We have to stand for human rights and we have to make sure that violence isn't being perpetrated against workers who are just trying to organize for their rights.”

Apparently McCain had some thoughts about Obama’s words on union leader assassinations, because right in the middle of Obama’s statement, McCain clearly rolled his eyes at the comment!

Though Obama brought up the union killings, this still shows that it’s not clear that either candidate is completely aware of the real situation in Colombia. Constant protests and violence, Afro-Colombian and indigenous persecution, Uribe-infused misinformation by the media, and all around suppression of basic human rights and freedoms. These issues were glossed over with vapid attacks on both sides. McCain scolded Obama for never having visited the country while at the same time calling Colombian President Uribe “our best ally in the region”.

This is the same president who has seen 434 union leaders murdered in the first six years of being in power. This debate took place on the same day that the Colombian army wounded 60 and killed 2 while confronting an indigenous protest, one that Uribe claims is “infiltrated” with terrorists and carrying out “massacres” on police. Yet, as delineated in a recent report by Human Rights Watch, it’s not the indigenous who are infiltrated with terrorists or carrying out massacres, it’s the Uribe government. There have been multiple reports showing findings of direct connections between the Colombian government and right-wing paramilitary death squads. It is all too clear that this is a brutal government the U.S. should not directly link to and support through an FTA.

Another Colombian Military Massacre

This attack by Colombian Armed Forces is only the most recent in wave of brutal repression and paramilitary violence against indigenous, Afro-Colombian, labor and human rights advocates in recent weeks. Over the past two days, the Army has assaulted indigenous activists protesters, killing at least two and injuring over a hundred. Scroll down to take action in their support.

The Indians are protesting the Colombian government's free market
economic policies; regional landowners they say have stolen their
territory; and government plans for a free-trade deal with the United
States.

The Indians, who are traditionally among the very
poorest in Colombian society, along with blacks, say they are worse off
than ever before.

Indian congressman Climaco Alvarez accused
police of firing on protesters with live rounds Wednesday. Police deny
using lethal force.

An Indian spokesman said one Indian was
killed in Wednesday's clashes and 39 were injured. That adds to
Tuesday's toll, given to CNN by another Indian spokesman, of one dead
and around 60 injured...

...One spokesman for the National Indigenous Council told CNN that
injuries to Indians, mostly of the Nasa tribe, had occurred in clashes
with riot police near the southwest town of La Maria Piendamo and
farther north near a community known as La Candelaria. He said 18 of
the injured at La Maria Piendamo had gunshot wounds.

This attack is part of a deepening pattern of violence in recent weeks, which have seen increasing threats and targeted murders of community leaders.Many Afro-Colombian and indigenous leaders have lost their lives just since Colombian President Uribe's pro-FTA lobby visit to the US last month. Riot police continue to harass and attack striking sugarcane workers not far from the scenes of the most recent state violence.

With most of our heads turned on a presidential election
looming large and how to fix the neoliberal mess of a deregulated,
free-market fundamentalist financial disaster, it seems likely Colombian government, desperate to minimize the perception of human rights abuses, is taking advantage. Apparently they can't stay on 'their best behavior' for a even just a month.

Human rights advocates remain vigilant, however, and are asking folks to take action to stave off further violence. We concur.

Please
call Susan Sanford, Colombia Desk Officer at the State Department at (202)
647-3142. Here is
a script of a sample message:

I am calling today to bring to your
attention the violent tactics the Colombian army and anti-riot police are using
against Indigenous protesters. The worst of this violence is taking place in
southwestern Colombia, the department of Cauca. I want to urge you and your
colleagues to ensure that human rights conditions for U.S. military assistance
are being enforced. I also encourage you to call on the Colombian government to
deal with the protesters through dialogue and in a peaceful
manner.

Then
call your member of Congress and urge them to take action to prevent further
bloodshed in Colombia. Call (202) 224-3121 and
ask the Capitol Switchboard operator to connect you to your member of Congressâ
office, or click
here to enter your address and find your representative and their direct
phone number. Here is a sample message:

Just a few weeks ago Colombiaâs
President Uribe was in the United States with a delegation of 80 people claiming
the human rights situation in Colombia is better. But the Colombian army and
anti-riot police are using repressive and violent tactics against Indigenous protesters. Reports indicate at least two deaths and dozens severely wounded,
some possibly fatally. Please
call on the Department of State to take rigorous measures to ensure that human
rights conditions for U.S. military assistance to Colombia are being
enforced.

October 15, 2008

Diaz-Balart skewers NAFTA with song (old)

I was digging around recently in our archives, and I came across this gem that I thought I would share. It's a 1993 floor statement by Rep. Lincoln Diaz-Balart (R-Fla.), who was once a fair trader, and voted against NAFTA, WTO, China PNTR and several times against Fast Track. But that was back in the Clinton years, when the oppo was in charge. Under Bush, he's been an ardent anti-fair trader, voting wrong on each of the 12 votes during that time period. But we can always remember, can't we Linc?

Mr. DIAZ-BALART. Mr. Speaker, I rise today to share with you a song written by one of my
constituents, Mr. Lowell J. Reynertson, that warns us of some of the evils of the North American Free-Trade Agreement. I would like to commend Mr. Reynertson for his efforts and clever lyrics. Mr. Reynertson played this song at a recent town meeting in my district and I want to share it with the rest of the House of Representatives.

(BY LOWELL J. REYNERTSON)Shout from the rafta, SAY NO TO NAFTA, for it will send all U.S. workers down the drain. Why do we hafta, still get the shafta, to pull this off I guess they think we have no brain. Let's ram this NAFTA, right up their afta, the mandate vote to change our ills is still our aim. If we pass NAFTA, we must be dafta, which means the lobbying of beggars still remain. We're not as stupid as we look, we know when we are being took, most heard it said I'm not a crook, it's time we played things by the book. Our nations debt would go away, if living wages we'd OK, so that in comfort all could stay, and income taxes gladly pay. There'll be no lafta until here afta, if all these grafta NAFTA draftas get their say. Let's stand united and not be slighted, and we can send these trouble-makers on their way. We've gorged the greedy, ignored the needy, which has resulted in our buying power shot. For change indeedy with mouths to feedy, we must awaken all the powers that we've got. Let's make the people understand, a living wage all could demand. If we would unionize this land, then everything would be so grand. Let's put this country on a roll, and not get deeper in the hole. There's far too many on the dole, so decent jobs would be our goal. We'd be productive, and not corruptive, if opportunities existed as before, But if we hafta, put up with NAFTA, then all the hopes and dreams we made would be no more. But should this grafta, stick us with NAFTA, then we must tax-exempt all U.S. goods we make. Restore these taxes, by raising taxes, on those that sold out all good labor by their take. We know that then we must compete, impossible would be this feat. Without our way of life deplete, from NAFTA's draftas sly deceit. So if our servants sell us out, their days are numbered, few will doubt. We'll rise and shout, you've made your clout, is mainly what this song's about. SAY NO TO NAFTA--NO, NO, NO! END

Taking stock of trade-poverty link on poverty day

Today is Blog Action Day on Poverty, and it seems like a good opportunity to remember the impact that our failed trade policies have had on the world's poor.

The worldwide gulf between rich and poor has widened under current trade policies. In the early 1990s, proponents of the WTO and NAFTA touted these pacts as keys to poverty reduction in developing nations and a more equitable global economic system. That same argument is being raised again today to promote the Doha Round WTO expansion.

One United Nations study concluded that, “in almost all developing countries that have undertaken rapid trade liberalization, wage inequality has increased, most often in the context of declining industrial employment of unskilled workers and large absolute falls in their real wages, on the order of 20-30 percent in Latin American countries.” World Bank projections show that the WTO Doha Round could make matter even worse, with only a few large developing countries likely to gain, while many countries and regions would be likely to suffer net losses.

Progress on growth and social development in poor countries slowed during the corporate globalization era. Increasing economic growth rates mean a faster expanding economic pie. With more pie to go around, the middle class and poor have an opportunity to gain without having to “take” from the rich – often a violent and disruptive process. But the growth rates of developing nations slowed dramatically in the current globalization period. For low- and middle-income nations, per capita growth between 1980 and 2000 fell to half that experienced between 1960 and 1980. The slowdown in Latin America was particularly extreme. There, income per person grew by 75 percent in the 1960-80 period, before the International Monetary Fund (IMF) and World Bank began imposing a package of deregulation, investment, and trade policies similar to that found in NAFTA and the WTO. Since adopting these policies, per capita income growth in Latin America plunged to 6 percent in the 1980-2000 period.

Even when taking into account the longer 1980-2005 period, there is no single 25-year window in the modern history of the continent that was worse in terms of rate of income gains. In other world regions, growth also slowed dramatically. In Sub-Saharan Africa, income per person actually shrank 15 percent, due to implementation of the neoliberal policy package as well as a variety of other contributing factors. Improvement measured by human indicators – in particular, life expectancy, child mortality and schooling outcomes – also slowed for nearly all countries in the current period as compared with 1960-80. Pro-FTA analysts consider these outcomes to have been a significant factor in the numerous Latin American elections where critics of current globalization policies prevailed (see here and here).

Poverty, hunger and displacement on the rise during the neoliberal period. The share of people living on less than $2 a day rose in Latin America & the Caribbean, the Middle East & North Africa, Sub-Saharan Africa and Eastern Europe over the 1993-2001 period, while the share living on less than $1 a day (the World Bank’s definition of extreme poverty) grew in Sub-Saharan Africa and the Middle East & North Africa.

According to the Food & Agriculture Organization, in 1996 “world leaders committed themselves to what was considered an ambitious but attainable intermediate target: to halve by 2015 the number of undernourished people in the world from the 1990 level. Ten years later, we are confronted with the sad reality that virtually no progress has been made towards that objective. Compared with 1990-92, the number of undernourished people in the developing countries has declined by a meager 3 million – a number within the bounds of statistical error.”

As nations have begun adopting NAFTA-WTO style policies, the displaced rural poor have had little choice but to emigrate to wealthy countries or join swelling urban workforces. As a recent exposé in the pro-NAFTA New Republic put it, “as cheap American foodstuffs flooded Mexico’s markets and as U.S. agribusiness moved in, 1.1 million small farmers – and 1.4 million other Mexicans dependent upon the farm sector – were driven out of work between 1993 and 2005. Wages dropped so precipitously that today the income of a farm laborer is one-third that of what it was before NAFTA. As jobs disappeared and wages sank, many of these rural Mexicans emigrated, swelling the ranks of the 12 million illegal immigrants living incognito and competing for low-wage jobs in the United States.” Indeed, a review of Mexican income growth rates, inequality, and manufacturing value-added shows that Mexico fared better before neoliberalism’s introduction relative to outcomes post-neoliberalism and post-NAFTA (see here and here).

Developing countries that did not adopt the neoliberal policy package fared better. In sharp contrast, nations that chose their own economic mechanisms and policies through which to integrate into the world economy had more economic success. For instance, China, India, Malaysia, Vietnam, and Chile (and Argentina since 2002) have had some of the highest growth rates in the developing world over the past two decades – despite largely ignoring the directives of the WTO, IMF and World Bank. It remains to be seen what will occur if these countries implement the corporate globalization policy package. It is often claimed that the successful growth record of countries like Chile was based on the pursuit of NAFTA-WTO-like policies. But nothing could be farther from the truth: Chile’s sustained rapid economic growth was based on the liberal use of export promotion policies and subsidies that are now considered WTO-illegal.

October 13, 2008

CAFTA Continues to Crawl

It’s now been over four years since the Central American Free Trade Agreement (CAFTA) was signed by Nicaragua, El Salvador, Honduras, Guatemala, and Costa Rica (and later the Dominican Republic) in March 2004, and two years since it was to take effect in March 2006. Two years later in March 2008 was the deadline for full implementation of the provisions. Yet countries, especially Costa Rica, have been slow to dive head first into this agreement.

In February of 2007, tens of thousands of Costa Ricans took to the streets to demonstrate the ratification and implementation of CAFTA, but it narrowly passed through a country-wide referendum vote in October 2007. Since then it’s been inching its way through the court system and government. The March 2008 implementation date has been extended several times, and just this past week was extended again til January 1, 2009.

All eyes are on this country, with the most prosperous economy in Central America and the third largest goods export market for the United States in Latin America. So while the US continues to pressure Costa Rica’s implementation of the agreement, the implementation date seems to float farther away as citizens and farmers speak out against CAFTA's lack of labor, environmental and health provisions, among a host of other concerns.

In other news, U.S. corporate takeover of Central America has continued. You may remember that Wal-Mart was able to buy control of Central America’s leading retail chain in 2006 when CAFTA went into place. Once the Central American Retail Holding Company (CARHCO), the retail chain has now been renamed to Wal-Mart Central America. Clever, eh? Guatemala experienced some of the largest Wal-Mart infiltration, with hundreds of stores being sucked into the international Wal-Mart conglomerate and out of the local economy.

Just as CAFTA encourages this sort of foreign investment, it makes sure to transfer plenty of control from the domestic government to the investing corporations. As part of CAFTA’s Investor Protection Provisions, foreign corporations are able to sue the local governments for any "potential loss of profit" for the company, as already demonstrated in dozens of cases through NAFTA.

Recently this incredibly vague provision in CAFTA began working its way through the Dominican Republic’s energy sector. The French investor Societe Generale sued the DR’s government for $680M in potential losses related to allegations that the government’s mistreatment of the company has led to a diminished value of EDE Este, a Societe Generale power company. More specifically, the company claims “catastrophic losses” due to allegations that the government has failed to prevent the theft of electricity, blamed the company for power blackouts, and encouraged Dominican citizens to forgo paying their electricity bills. That’s a $680 million whine that could transfer millions of taxpayer dollars to the hands of a foreign private corporation.

Having cautiously embraced this view, Krugman almost immediately (and
prudently) distanced himself from its implications. His early writings
warned that even though gains from industrial targeting and strategic trade
policy were in principle possible, it was not at all clear that governments
would act wisely in their pursuit of strategic advantage. And there was
the usual risk that each nation's strategic efforts would degenerate into
"beggar-my-neighbor trade policies" and even trade war... By the late
1980s, Krugman was railing against advocates of strategic trade and industrial
policy, as dangerous opportunists and frauds.

In recent years, Krugman has appeared to grow more comfortable with progressives, coauthoring some work with CEPR economist Dean Baker and showing up at EPI events. In an NYT column from last year, Krugman said that trade is now even “a bigger factor than it was” at the time of his early work in explaining skyrocketing inequality. And he noted that the easy fixes proposed by all too many in Washington are off the mark:

Realistically, however, labor standards won’t do all that much for
American workers. No matter how free third-world workers are to
organize, they’re still going to be paid very little, and trade will
continue to place pressure on U.S. wages...

By all
means, let’s have strong labor standards in our pending trade
agreements, and let’s approach proposals for new agreements with an
appropriate degree of skepticism. But if Democrats really want to help
American workers, they’ll have to do it with a pro-labor policy that
relies on better tools than trade policy. Universal health care, paid
for by taxing the economy’s winners, would be a good place to start.

And that is where most economists - including many progressive ones - stop. As with the 1990s debate, too many policy wonks don't really care to engage with the main arguments advanced by the global-justice movement: that neoliberal institutions are harmful to democracy and are not really about trade promotion, but deregulation. That's why even health-care advocates should care about WTO rules that limit the kinds of domestic health-care reforms we can pursue, as we show in a recent report.

In closing, I was riveted by Krugman's academic work as a grad student (Harvard's Ed Glaeser even makes his students memorize his equations). His NYT columns provide biweekly grist for progressives. And more than many economists, he has been willing to entertain ideas and research outside of the accepted neoclassical dogmas. This is an exciting Nobel choice, and we look forward to seeing how Krugman's views on trade policy continue to evolve in the years to come.

October 11, 2008

I told you so

The annual meetings of the World Bank, I.M.F. and G-7 finance
ministers typically do not carry with them much in the way of urgency.
The script is usually so familiar that the Washington police know it by
heart: finance ministers arrive in their limos and stake out their
tables at the city’s best restaurants; free-market protestors dressed
like Mutant Ninja Turtles kick up a ruckus in a tiny triangular patch
of park across from World Bank headquarters; a few of the protesters
get arrested trying to enter the building; and the news media, and the
rest of the city, largely ignore the event.

A steady refrain
from the protesters has been that more economic nationalism is needed,
both to protect the poor and to prevent big corporations from robbing
smaller countries of wealth. They have argued that more regulation is
needed to keep big business in check, and have derided free markets as
benefiting only a narrow swath of society.

Typically at World
Bank meetings, officials grouse about the misguided protesters. This
year, things are a little different. “There’s no question the
Washington consensus is dead,” one senior World Bank official said,
requesting anonymity because he was not authorized to speak publicly to
a reporter. He said he was referring to “the free-market consensus,”
adding that at the World Bank, the push toward deregulation and
unfettered free markets “died at the time of the $700 billion bailout.”

After we give the swindlers their deficient capital...

Never before have world markets been so integrated. And yesterday's
concerted interest rate cuts by central banks in the United States and
other countries from Britain to China was a signal that the financial
crisis rippling around the globe has grown too big for any one of them
- even the US Federal Reserve - to contain on its own.

It also
could mark the start of an effort to overhaul the global financial
system conceived at the 1944 summit in Bretton Woods, N.H., which set
the rules of international commerce for industrial countries...

Critics of global trade and finance, long a vocal minority in many
countries, including the United States, have based much of their
opposition on such historical factors as job migration. Now they see
their cause gaining momentum as lawmakers push for tougher oversight
and financial restrictions to stem the mayhem in world markets. US
Representative Barney Frank, Democrat of Newton, has called for
stepped-up regulation of investment banks and other financial
institutions.

"There's going to be a large push for
re-regulation," said Lori Wallach, director of Public Citizen's Global
Trade Watch, a policy advocacy group in Washington. Wallach said trade
pacts have undermined safeguards for workers and consumers worldwide.

"We're
seeing the fruits of three decades of deregulation of the financial
markets," said Tonya Hennessey, project director at CorpWatch, an
antiglobalization group in San Francisco. "Because of that, we've had
this complex packaging of securities sold around the world. There's no
choice but to go back to strong regulation."

October 08, 2008

Getting trade in the debates

(Disclosure: Global Trade Watch has no preference among the candidates.)

The trade issue almost shone through in last night's presidential debate, with McCain seeming to say that he would close the trade deficit (which is around $700 billion), but then saying he thinks the U.S. is a great importer, and then bashing "protectionism."

Americans are angry, they're upset, and
they're a little fearful. It's our job to fix the problem.
Now, I have a plan to fix this problem and it has got to do with
energy independence. We've got to stop sending $700 billion a year to
countries that don't want us very -- like us very much...

The point is -- the point is that we can fix our economy.
Americans' workers are the best in the world. They're the fundamental
aspect of America's economy.

They're the most innovative. They're the best -- they're most --
have best -- we're the best exporters. We're the best importers.
They're most effective. They are the best workers in the world...

Well, you know, nailing down Senator Obama's various tax
proposals is like nailing Jell-O to the wall. There has been five or
six of them and if you wait long enough, there will probably be
another one.

But he wants to raise taxes. My friends, the last president to
raise taxes during tough economic times was Herbert Hoover, and he
practiced protectionism as well, which I'm sure we'll get to at some
point.

In other news, the Institute for America's Future and David Sirota are running a series of paid "op-ads" that are demanding that the candidates address the trade issue. Go here to get involved!

October 07, 2008

Loser Tells us How to Run the Country

(Disclosure: Global Trade Watch has no preference among the candidates.)

Hey, remember that guy named Mark Penn? Yeah, he worked for the paramilitary-linked government of Colombia to help pass a NAFTA expansion to that country, while at the same time running a presidential campaign of someone who opposed that pact. Hey, how did that work out for that particular consultant, and that particular candidate?

Gee, I can't remember back that far. But he sounds like the kinda guy I want to take advice from. Here's what Marky Mark wrote in Politico today:

Much of today’s gridlock problems are the fault of President Bush, who
in his 2000 campaign pledged to defuse partisanship but who, upon
entering the White House, pushed it as far as it could go at every
turn. Virtually every initiative that would have required the
common-sense center to coalesce has collapsed. ... Trade and global
economic policy are also a mess because the center could not win out.

And yet, freed from the constraints of the left and the right, and
under the right leadership, there is a vital center waiting to enact
all of these measures. If Obama wins the presidency, it will fall to
him to put together coalitions that would earn congressional support.
Yet even the likelihood of expanded Democratic congressional majorities
does not ensure success. After all, during his first two years in
office, President Bill Clinton enjoyed Democratic majorities in the
House and Senate, but conservatives succeeded in 1994 by portraying his
first two years as surrender to liberal big government.

During President Clinton’s next six
years in office, working with Republican congressional majorities, he
achieved partial immigration reform, welfare reform, a balanced budget
and significant increases to the minimum wage. While some on the left
denigrate these achievements as triangulation, it was actually a
centrist government molded by the left and right pulls of Clinton and
Republican leaders such as House Speaker Newt Gingrich and Senate
Majority Leader Trent Lott, each bound by what centrists in both
parties would be willing to pass.

This brings us back to the bailout. Solving this immediate economic
crisis is just a first step. America needs reform of energy policy,
entitlements, immigration and health care, to name just a few pressing
national problems, if it is going to remain competitive with the rest
of the world in the 21st century. Free and fair trade represent further
challenges.

The nation’s center could probably find solutions to all of these problems pretty quickly.

Ow, mom. This historical revisionism stuff hurts! Didn't that Bill Clinton administration Mark is talking so fondly about LOSE its congressional majorities after pushing NAFTA instead of health care? And, he
y, wait, didn't the Bush administration Clinton go almost its entire two terms without any Fast Track trade authority because people just didn't trust him on trade?

Most people would say something is centrist if it serves the interest and matches the view of the median voter / citizen. Folks, I don't know how many polls, and more polls, and research papers have to be published before establishment elites start realizing that a centrist position on trade is a fair-trade position. I guess when you're gunning for the Colombian gunners, your sample gets a bit skewed.

So what's a candidate that digs NAFTA and the WTO to do in Michigan? Apparently not compete there, according to the latest news on the McCain campaign's efforts in the state. According to the NYT:

Mr. McCain’s struggles in Michigan were clear at the campaign stop at a
factory in Belleville in July, where he found himself peppered with
questions about his support for free trade by workers who believe it
has cost the state jobs.

At the same time, McCain has told an editorial board that he favors cutting off trade with Iran.

Q: You’ve been accused of flip-flopping on the issue of free
trade. Some key advisers of yours — Bob Rubin, Jason Furman — have some
strong pro-NAFTA, pro-free trade histories, yet you’ve said some pretty
harsh anti-NAFTA things in the primaries and made what you said was a
protest vote on CAFTA. … What specifically can and should the country
do to distribute what you call the costs and benefits of globalization
more equitably?

A: That last point you made is
exactly where I stand about free trade. I am a free trade proponent. I
strongly believe in it. But I also believe that my job as president is
to promote free trade as a tool of American prosperity, and not simply
assume that every free trade deal is a good deal for America. It’s not.

By margin of nearly three-to-one, likely voters
believe that the United States should revise or withdraw from NAFTA.
I’ll call this combination of positions the “anti-NAFTA” position.

Anti-NAFTA voters outnumber pro-NAFTA (“leave it
the same”) voters in every demographic
group, regardless of party affiliation,
region, age, race, union membership status, whether they come from a small or
large town or rural area, marital and parental status, religion, gender,
education and income level, passport possession status, whether they identify
as being a resident of “my city or town,” “America,” or “Planet Earth,” and
frequency of shopping at Wal-Mart … even voters that identify as NASCAR fans
and the investor class match the pattern.

The demographics that most identify with
anti-NAFTA sentiment were progressives (81%), liberals (71%), Democrats (71%), union
members (68%) and those that never shop at Wal-Mart (66%) – which one might
expect. But similarly anti-NAFTA were self-described internationalists (residents
of “Planet Earth,” 71%) and Hispanics (65%). This undercuts the claim sometimes
made by pundits that anti-NAFTA sentiment is motivated by xenophobia. Other
particularly anti-NAFTA groups were those with incomes of between $25-35
thousand a year (67%), divorcees/widowers, and those that did not identify with
Judeo-Christian religion (both 65%). These percentages factor in both pro-NAFTA
and unsure/unfamiliar responses.

The demographics that least identify with
anti-NAFTA sentiment are Asians (49%), and those that identify as conservative
or very conservative in ideology (46% each). While anti-NAFTA sentiment does
not garner majority support in these demographics, anti-NAFTA sentiment still
outranks pro-NAFTA sentiment once the unsure/unfamiliar are excluded.

Speaking of which, pundits sometimes claim that most
or many people are pro/unsure/unfamiliar on NAFTA, so that candidates would better
off avoiding the topic. But the Zogby poll contradicts this notion. With the
exception of those demographics noted above, anti-NAFTA sentiment tops 50%
support for every demographic.

By a margin of around 2.5 to one, Catholics and
voters in the armed forces are more anti- than pro-NAFTA. Both are considered
important demographics in this election.

The Zogby poll also asked questions about what the U.S.
Congress should do about the Colombia FTA.

Anti-FTA voters outnumbered pro-FTA voters in
every demographic group, regardless of party affiliation, region, age, race,
union membership status, whether they come from a small or large town or rural
area, marital and parental status, religion, gender, education and income
level, passport possession status, whether they identify as being a resident of
“my city or town,” “America,” or “Planet Earth,” and frequency of shopping at
Wal-Mart … even voters that identify as NASCAR fans and the investor class
match the pattern.

The only demographic exceptions – which were
nonetheless close to evenly split were among those that identified as
Republican or conservative. But voters farther to the right – the “very
conservative” and “libertarian” – agreed with their more progressive fellow
voters.

Because of the relatively high numbers of
Americans who are unfamiliar/unsure on the Colombia FTA, there were few
demographic groups were the anti-FTA position topped 50%. Among those were
anti-FTA topped 50% were: progressives (64%), internationalists (56%), liberals
(55%), those that never shop at Wal-Mart and in civil unions (both 54%),
Democrats (53%), and African-Americans (51%).

October 03, 2008

Cane Workers Strike As FTA Left in Legislative Dust

Recent events bode well for Fair Trade proponents in the US, if less well for striking sugarcane workers in Colombia - who need your support. For starters, the broad public outcry against the laissez-faire fundamentalist attitudes that have set off the financial crisis should prove to the leadership the dangers of imposing any further liberalization and deregulation on the international trade front via FTAs. But there are at least three other reasons:

1&2) Congress this week passed extensions of both the Trade Adjustment Assistance (TAA) and Andean Trade Preferences (APTDEA) programs, ending the game of chicken that certain anti-fair trade Members of Congress were playing to attempt to force votes on pending NAFTA expansions, possibly in a lame-duck session. Well no more!

In terms of TAA, they hoped that the public would be silly enough to let them tether the fate of the workers they've displaced with their unfair policies to passing expansions of the very same failed policies. Its sinister strategy that reveals their level of contempt for the American worker and their intelligence. With ATPDEA,the livelihoods of poor Andean farmers the balance, and luckily the anti-fair traders bluff of removing the incentives to grow anything other than illicit drug crops, has been called, and it looks like the FTA won't see the light of day for some time.

Hooray for an end to that foolhardiness and hypocrisy!

3) The Uribe Government Reaffirms 'Respect For Labor Rights'... By Attacking Workers.

Several groups this week called out Colombian government's disrespect for labor rights in its violent repression of 18,000 striking workers. Several organizations including the AFL-CIO, WOLA, Witness for Peace, the ILRF and others have issued statements condemning this disrespect for labor rights and demanding a peaceful negotiated settlement.

In the process, they highlight the blatant hypocrisy of the Uribe government who just prior to his police attacking these workers embarked on a pro-FTA lobby trip to the US to highlight the progress made in protecting labor human rights in Colombia. There's the full detail after the jump, but be sure to take action to condemn the hypocrisy and protect the workers here.

The Colombian government's flashy PR campaign can't change the simple fact that their word is as only as good as their deed. With these and more bad deeds constantly coming to light, looks like they are out of luck passing off their lies trying to pass the FTA.

October 01, 2008

Free Traitors

Chris Hayes writes in the New Republican on the growing trade revisionist movement in mainstream economicsland, and notes:

It's not just workers in the importing sector
that suffer the wage cut" when forced to
compete with foreign workers,
says Bivens. "It's everyone that looks like them. Landscapers don't get
replaced by imports, but their wages are depressed by having to compete
with laid-off apparel workers." ...

Just
how much the losers have lost is a matter of debate, but most
economists agree that the wealth gained from free trade has been
redistributed upward, toward the skilled, and that low-skilled workers
have suffered the most. They also agree that, as a portion of the total
U.S. economy, the overall net benefit of NAFTA and other free-trade
deals is too small to find with even the most powerful econometric
microscope. What you're left with is a small gain in the nation's net
income and a strong, lasting depression of wages that hits exactly the
kinds of unskilled workers who had already been falling further and
further behind.